TMI Blog2017 (10) TMI 1509X X X X Extracts X X X X X X X X Extracts X X X X ..... D SHRI RAVISH SOOD, JM For the Appellant : None For the Respondent : Shri. Rajat Mittal, D.R. ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present set of cross appeals filed by the assessee and the revenue are directed against the order passed by the CIT(A)-10, Mumbai, for A.Y. 2012-13, which in itself arises from the assessment order passed by the A.O under Sec. 143(3), dated. 23.02.2015. That as common issues are involved, therefore, the said cross appeals are taken up together and disposed of by way of a consolidate order. The assessee had assailed the order of the CIT(A) by raising before us the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law the learned Commissioner of Income-tax (Appeals) erred in confirming addition of ₹ 14,99,968/- being 6% purchases of 2,49,99,469/- made from M/s Olive Overseas Pvt. Ltd. 2. On the facts and in the circumstances of the case and in law the learned Commissioner of Income-tax (Appeals) erred in confirming order made under section 143(3) of the Act by the learned Assessing Officer which is illegal, bad-in-law, ultra vires, without allowing reasonable opportuni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of providing accommodation entries of various nature, viz. bogus unsecured loans, bogus share application and bogus sales (purchases for the beneficiaries) etc. 3. That in the backdrop of the aforesaid information, the A.O called upon the assessee to show cause as to why the purchases claimed to have been made from the aforesaid concern, viz. M/s Olive Overseas Pvt. Ltd. may not be considered as bogus since Mr. Praveen Kumar Jain and Mr. Nilesh Parmar in their respective statements recorded under Sec. 132(4)/131 of the Act , had confessed before the DDIT, Investigation, Mumbai, that the said concern was non-existent one and the directors who had signed the papers were dummies and had signed the papers for a nominal consideration. It was further stated by the aforesaid persons in their respective statements that they were only involved in issuing bogus bills and no physical transaction of goods had taken place. That it also came to the notice of the A.O that the investigation team of the department had also found the address of a secret premises at Thane which was operated by Sh. Uttam Hinger, the brother-in-law of Sh. Praveen Kumar Jain. The A.O further observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not persuaded to accept the contention of the assessee that it had made genuine purchases of goods from the abovementioned hawala party. The CIT(A) observed that Sh. Praveen Kumar Jain had in his statement recorded during the course of the search and seizure action conducted on him and his group entities by the Investigation wing of the department, clearly admitted that they were not involved in any real trading of diamonds and were only providing bogus bills for a small consideration. The CIT(A) observed that the A.O in the backdrop of the fact that the M/s Olive Overseas Pvt. Ltd, a group entity of Sh. Praveen Jain group was found to be a non-existent party and had not carried out any genuine sales, therefore, being of the view that the assessee had failed to prove the genuineness and veracity of the purchase transactions claimed to have been made from the said concern on the basis of irrefutable evidence, thus, brought to tax the entire bogus purchases standing in the name of the aforesaid concern, viz. M/s Olive Overseas Pvt. Ltd. However, the CIT(A) being of the view that the A.O had accepted the sales of the assessee and had failed to conclusively prove that the payments of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the assessee despite being intimated about the hearing of the appeal had neither appeared before us, nor any application seeking an adjournment had been filed. We thus, being left with no other alternative dispose of the present appeals after hearing the Departmental representative (for short D.R ) and perusing the material available on record. The ld. D.R relied on the order of the A.O and submitted that keeping in view the very fact that Sh. Praveen Kumar Jain had clearly admitted that he and his group entities were only providing accommodation entries and had not carried out any genuine sales, and the assessee had failed to prove the genuineness and veracity of the purchases claimed to have been made from M/s Olive Overseas Pvt. Ltd., the addition of the entire purchase consideration was rightly made by the A.O u/s 69C. The ld. D.R to support his contention drew our attention to Page 10 Para 4.4 of the order passed by the A.O. The ld. D.R submitted that as the CIT(A) had passed the order without appreciating the facts of the case in the right perspective, therefore, his order may be set aside and that of the A.O be restored. 7. We have heard the ld. D.R, per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profit involved in making of the purchases by the assessee from the Open/grey market, but are unable to persuade ourselves to be in agreement with the basis that had been adopted by him for quantification of the profit element involved in making of the bogus purchases. We find that the CIT(A) had referred to the judgment of the Hon ble High Court of Gujarat in the case of CIT Vs. Simit P. Sheth (2013) 356 ITR 451 (Guj), and had observed that the High Court after referring to the VAT benefit had worked out the profit element in respect of the bogus purchases at 12.5%. The CIT(A) thereafter took cognizance of the VAT of 1% and custom duty of 2% in the diamond business. The CIT(A) further took cognizance of the CBDT Instruction No. 2/2008; dated. 22.02.2008, wherein it was observed by the Board that in case an assessee in the diamond trade had shown profits of 6% of its total turnover, then the same was to accepted. We find that the CIT(A) by referring to and taking the aforesaid CBDT Instruction No. 2/2008 as a basis, had held that the addition in the hands of the assessee in respect of the bogus purchases was to be restricted to the extent of 6% of the purchases claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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